Behind the Scenes @ the Bailout Talks

When Sen. John McCain made his way to the Capitol office of House Minority Leader John A. Boehner (R-Ohio) just past noon on Thursday, he intended to "just touch gloves" with House Republican leaders, according to one congressional aide, and get ready for the afternoon bailout summit at the White House.

Instead, Rep. Paul D. Ryan (Wis.), the ranking Republican on the House Budget Committee, was waiting to give him an earful. The $700 billion Wall Street rescue, as laid out by Treasury Secretary Henry M. Paulson Jr., was never going to fly with House Republicans, Ryan said. The plan had to be fundamentally reworked, relying instead on a new program of mortgage insurance paid not by the taxpayers but by the banking industry.

McCain listened, then, with Sen. Lindsey O. Graham (S.C.), he burst into the Senate Republican policy luncheon. Over a Tex-Mex buffet, Sens. Robert F. Bennett (Utah) and Judd Gregg (N.H.) had been explaining the contours of a deal just reached. House Republicans were not buying it. Then McCain spoke.

"I appreciate what you've done here, but I'm not going to sign on to a deal just to sign the deal," McCain told the gathering, according to Graham and confirmed by multiple Senate GOP aides. "Just like Iraq, I'm not afraid to go it alone if I need to."

For a moment, as Graham described it, "you could hear a pin drop. It was just unbelievable." Then pandemonium. By the time the meeting broke up, the agreement touted just hours before -- one that Sen. Lamar Alexander (Tenn.), the No. 3 GOP leader, estimated would be supported by more than 40 Senate Republicans -- was in shambles.

An incendiary mix of presidential politics, delicate dealmaking and market instability played out Thursday in a tableau of high drama, with $700 billion and the U.S. economy possibly in the balance. McCain's presence was only one of the complicating factors. Sen. Barack Obama played his part, with a hectoring performance behind closed doors at the White House. And a brewing House Republican leadership fight helped scramble allegiances in the GOP.

It is unclear whether the day's events will prove to be historically significant or a mere political sideshow. If the administration and lawmakers forge an agreement largely along the lines of the deal they had reached before McCain's arrival Thursday, the tumult will have been a momentary speed bump. If the deal collapses, the recriminations spawned that day will be fierce.

But if a final deal incorporates House Republican principles while leaning most heavily on the accord between the administration, House Democrats and Senate Republicans, all sides will be able to claim some credit -- even if the legislation is not popular with voters.

"If there is a deal with the House involved, it's because of John McCain," Graham, one of the Arizonan's closest friends in the Senate, said yesterday.

In truth, McCain's dramatic announcement Wednesday that he would suspend his campaign and come to Washington for the bailout talks had wide repercussions.

Democrats, eager to reach a deal before McCain could claim credit, hunkered down and made real progress ahead of his arrival. Conservative Republicans in the House reacted as well, according to aides who were part of the talks.

The Republican Study Committee, an enclave of House conservatives, had already begun turning against the Paulson plan. When McCain announced his return, the conservatives feared he would forge an agreement largely along Paulson's lines, with slight alterations and the GOP leadership's blessing.

"No one knew where he was going," one of the aides said.

Boehner, who had initially greeted Paulson's plan with some warmth, faces a brewing battle next year for the party leadership. Conservatives were making it no secret that they were thinking of backing House Deputy Republican Whip Eric Cantor (R-Va.) in a challenge to Boehner, and Paulson's request for $700 billion was not making matters better.

On Wednesday afternoon, Boehner appointed a new working group, led by Cantor, Ryan and Republican Study Committee Chairman Jeb Hensarling (R-Tex.), and including some moderates, to see if they could put together an alternative proposal. McCain's impending arrival shifted that effort into high gear. By the time McCain arrived in Boehner's office Thursday, the principles of a new plan were ready.

According to Republican aides, McCain was in Boehner's office when the announcement of a deal crossed their BlackBerrys. Rep. Spencer Bachus (Ala.), the House Republicans' representative in the talks, stumbled into the meeting to be peppered by participants with incredulous questions.

It was Ryan who made it most clear that there really was no deal. The core of Paulson's plan -- using $700 billion in taxpayer money to buy distressed assets from failing financial firms -- had to be changed, he told McCain. Instead, banks should have to pony up money for a new federally administered insurance program, like the Federal Deposit Insurance Corp. Banks suffering from mortgage defaults would then be able to draw funds from the insurance pool to remain solvent.

It was not a new idea, White House and Treasury officials said. Paulson and Federal Reserve Chairman Ben S. Bernanke had considered a similar option and rejected it. For one thing, asking banks teetering on the edge of bankruptcy to pay into the insurance fund would be like asking a patient facing heart surgery to buy health insurance before being wheeled into the operating room. The banks would be too weak to pay, and the cost of the insurance would be so high, drawing on the fund after a round of mortgage foreclosures would merely be repaying the banks what they had paid in.

Besides, one Treasury official said, it would do nothing to address the problem at hand. Banks would have no more money than they do now to lend. And they would still be holding the bad assets that are making it impossible for them to borrow.

Paulson made those points Wednesday at a contentious meeting with House Republicans. But Ryan convinced McCain that the idea had to be taken seriously to bring House Republicans on board.

"McCain has been trying to help the House guys, trying to get their ideas into the broader bill," said a senior Republican Senate aide. "If McCain can do that, he can bring 50 to 100 House Republicans to the bill. That would be a big damn deal."

McCain and Graham made just that point at the Tex-Mex lunch, but McCain also spoke in the starkly personal terms of a presidential candidate in trouble: "You all put me on the hook for $700 billion," he told his colleagues, according to an aide familiar with the lunch.

The breakdown was serious enough that word reached Paulson. Just 25 minutes before the scheduled meeting at the White House, Paulson phoned House Speaker Nancy Pelosi (D-Calif.) to alert her to trouble, according to a Senate Democratic leadership aide. When congressional leaders converged on the White House, the Democrats peeled off into the Roosevelt Room to discuss the revolt over the insurance plan. President Bush was kept waiting, something he has always hated.

After the cameras left the Cabinet room, Bush thanked everybody for their spirit of cooperation and said he knew it was not an easy vote. He knew elements still needed to be worked out and said he wanted to go around the table to hear people's views.

Pelosi said Obama would speak for the Democrats. Though later he would pepper Paulson with questions, according to a Republican in the room, his initial point was brief: "We've got to get something done."

Bush turned to McCain, who joked, "The longer I am around here, the more I respect seniority." McCain then turned to Boehner and Senate Minority Leader Mitch McConnell (R-Ky.) to speak first.

Boehner was blunt. The plan Paulson laid out would not win the support of the vast majority of House Republicans. It had been improved on the edges, with an oversight board and caps on the compensation of participating executives. But it had to be changed at the core. He did not mention the insurance alternative, but Democrats did. Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, pressed Boehner hard, asking him if he really intended to scrap the deal and start again.

No, Boehner replied, he just wanted his members to have a voice. Obama then jumped in to turn the question on his rival: "What do you think of the [insurance] plan, John?" he asked repeatedly. McCain did not answer.

One Republican in the room said it was clear that the Democrats came into the meeting with a "game plan" aimed at forcing McCain to choose between the administration and House Republicans. "They had taken McCain's request for a meeting and trumped it," said this source.

Congressional aides from both parties were standing in the lobby of the West Wing, unaware of the discord inside the Cabinet room, when McCain emerged alone, shook the hands of the Marines at the door and left. The aides were baffled. The plan had been for a bipartisan appearance before the media, featuring McCain, Obama and at least a firm statement in favor of intervention. Now, one of the leading men was gone.

The rest of the actors poured out of the room still highly agitated. Democrats clustered in the hall between the lobby and the Oval Office, pressing Bachus to explain what had happened to the deal. The Democrats discussed whether to go before the cameras waiting in front of the White House, but Obama refused. Without McCain next to him, he said, he would be skewered for using the White House as a backdrop. As the talk grew louder, Obama asked if they could duck into a room, and back they went to the ornate, windowless Roosevelt Room.

It was then that Paulson gingerly walked in to beg, "Don't blow this up, please." The secretary feared that Democrats would throw their hands up and declare the deal dead.

The crowd erupted in unison, all barking at Paulson that they were not the problem -- he needed to talk to his own party. Under the barrage, Paulson dropped to one knee, clasped his hands in front of his face as if he were praying and joked: "Please, please, don't blow this up. Give me some time."

McCain never suspended his campaign, and did more to derail the talks than help it. I expected Dems to blast his moves over the weekend, but when Republicans stayed silent, it was pretty obvious everything we've heard was true.

He went to the meeting and didn't say anything. He had nothing to add, and nobody welcomed him injecting the campaign into the talks.

He then flip-flopped on his position:
-The debate is postponed!
-The debate is postponed until the crisis is over!!
-The debate is postponed until we have an agreement!!!
-Uh, nevermind.

Saturday and Sunday - McCain spent the days on the phones.
Supposedly "helping" to bring about a resolution, even though GOP leaders state that McCain had no involvment in negotiations.

So did McCain just learn about this TELEPHONE device?
Couldn't he have used it LAST WEEK, if all he was going to do was show up, and create disorder?

Let me cut to the chase. The biggest robbery in the history of this country is taking place as you read this. Though no guns are being used, 300 million hostages are being taken. Make no mistake about it: After stealing a half trillion dollars to line the pockets of their war-profiteering backers for the past five years, after lining the pockets of their fellow oilmen to the tune of over a hundred billion dollars in just the last two years, Bush and his cronies -- who must soon vacate the White House -- are looting the U.S. Treasury of every dollar they can grab. They are swiping as much of the silverware as they can on their way out the door.

No matter what they say, no matter how many scare words they use, they are up to their old tricks of creating fear and confusion in order to make and keep themselves and the upper one percent filthy rich. Just read the first four paragraphs of the lead story in last Monday's New York Times and you can see what the real deal is:

"Even as policy makers worked on details of a $700 billion bailout of the financial industry, Wall Street began looking for ways to profit from it.

"Financial firms were lobbying to have all manner of troubled investments covered, not just those related to mortgages.

"At the same time, investment firms were jockeying to oversee all the assets that Treasury plans to take off the books of financial institutions, a role that could earn them hundreds of millions of dollars a year in fees.

"Nobody wants to be left out of Treasury's proposal to buy up bad assets of financial institutions."

Unbelievable. Wall Street and its backers created this mess and now they are going to clean up like bandits. Even Rudy Giuliani is lobbying for his firm to be hired (and paid) to "consult" in the bailout.

The problem is, nobody truly knows what this "collapse" is all about. Even Treasury Secretary Paulson admitted he doesn't know the exact amount that is needed (he just picked the $700 billion number out of his head!). The head of the congressional budget office said he can't figure it out nor can he explain it to anyone.

And yet, they are screeching about how the end is near! Panic! Recession! The Great Depression! Y2K! Bird flu! Killer bees! We must pass the bailout bill today!! The sky is falling! The sky is falling!

Falling for whom? NOTHING in this "bailout" package will lower the price of the gas you have to put in your car to get to work. NOTHING in this bill will protect you from losing your home. NOTHING in this bill will give you health insurance.

Health insurance? Mike, why are you bringing this up? What's this got to do with the Wall Street collapse?

It has everything to do with it. This so-called "collapse" was triggered by the massive defaulting and foreclosures going on with people's home mortgages. Do you know why so many Americans are losing their homes? To hear the Republicans describe it, it's because too many working class idiots were given mortgages that they really couldn't afford. Here's the truth: The number one cause of people declaring bankruptcy is because of medical bills. Let me state this simply: If we had had universal health coverage, this mortgage "crisis" may never have happened.

This bailout's mission is to protect the obscene amount of wealth that has been accumulated in the last eight years. It's to protect the top shareholders who own and control corporate America. It's to make sure their yachts and mansions and "way of life" go uninterrupted while the rest of America suffers and struggles to pay the bills. Let the rich suffer for once. Let them pay for the bailout. We are spending 400 million dollars a day on the war in Iraq. Let them end the war immediately and save us all another half-trillion dollars!

I have to stop writing this and you have to stop reading it. They are staging a financial coup this morning in our country. They are hoping Congress will act fast before they stop to think, before we have a chance to stop them ourselves. So stop reading this and do something -- NOW! Here's what you can do immediately:

1. Call or e-mail Senator Obama. Tell him he does not need to be sitting there trying to help prop up Bush and Cheney and the mess they've made. Tell him we know he has the smarts to slow this thing down and figure out what's the best route to take. Tell him the rich have to pay for whatever help is offered. Use the leverage we have now to insist on a moratorium on home foreclosures, to insist on a move to universal health coverage, and tell him that we the people need to be in charge of the economic decisions that affect our lives, not the barons of Wall Street.

2. Take to the streets. Participate in one of the hundreds of quickly-called demonstrations that are taking place all over the country (especially those near Wall Street and DC).

3. Call your Representative in Congress and your Senators. (click here to find their phone numbers). Tell them what you told Senator Obama.

When you screw up in life, there is hell to pay. Each and every one of you reading this knows that basic lesson and has paid the consequences of your actions at some point. In this great democracy, we cannot let there be one set of rules for the vast majority of hard-working citizens, and another set of rules for the elite, who, when they screw up, are handed one more gift on a silver platter. No more! Not again!

P.S. Having read further the details of this bailout bill, you need to know you are being lied to. They talk about how they will prevent golden parachutes. It says NOTHING about what these executives and fat cats will make in SALARY. According to Rep. Brad Sherman of California, these top managers will continue to receive million-dollar-a-month paychecks under this new bill. There is no direct ownership given to the American people for the money being handed over. Foreign banks and investors will be allowed to receive billion-dollar handouts. A large chunk of this $700 billion is going to be given directly to Chinese and Middle Eastern banks. There is NO guarantee of ever seeing that money again.

P.P.S. From talking to people I know in DC, they say the reason so many Dems are behind this is because Wall Street this weekend put a gun to their heads and said either turn over the $700 billion or the first thing we'll start blowing up are the pension funds and 401(k)s of your middle class constituents. The Dems are scared they may make good on their threat. But this is not the time to back down or act like the typical Democrat we have witnessed for the last eight years. The Dems handed a stolen election over to Bush. The Dems gave Bush the votes he needed to invade a sovereign country. Once they took over Congress in 2007, they refused to pull the plug on the war. And now they have been cowered into being accomplices in the crime of the century. You have to call them now and say "NO!" If we let them do this, just imagine how hard it will be to get anything good done when President Obama is in the White House. THESE DEMOCRATS ARE ONLY AS STRONG AS THE BACKBONE WE GIVE THEM. CALL CONGRESS NOW.

I know the name at the end with make it stupid to some of you but does it matter who says it, im predicting with my juvenile political knowledge this will be the beginning of serious problems in the american economy. Poof! here ya go 700B! money for execs in a slumping, deficit economy and the sickly broke people are left to fight the war and grab the tab. How does bush keep convincing people?!?! He creates a scapegoat that doesnt exist or is irrelevant, makes a mess justifies it and then does another stupid thing based on the lastone.
Ohh the anthrax, oh the now non existent SARS?!?!?, bird flu, west nile, terrorist attacks, red level allerts, amber level alerts, imminent danger, WMD's, 95% of cargo and freight goes un checked while americans and visitors are treated like terrorists.
This government is so predictable and there always someone quick to reference koolaid and conspiracy theorists, as if these blanket statements make a brainwashed citizen supperior to others with common sense. Take all the facts you want to support this government, but c'mon the tiny facts keep you from seeing the big picture here. Who cares if your republican, democrat your always a human first and supporting this is absolutely rediculous, loosing rights, loosing lives, losing free speech and now your pockets are empty. Freedom..... peace....... rights..... what has been gained besides rich people getting more money for american, canadian and middle eastern sacrifice and suffering. now enter hatred, blanket statements and and condescention. "your a really left wing liberal koolaid drinker, hyuck" umm nope just a guy with sense and some cents.

They are backing this idea with money from the federal reserve, its comprised of several global powerhouse banks privately traded and also silent owners of the apparently suffering lenders. There is no accountability proposed(punitive damages or fines) , no paper trail following, no directly implied amounts, not one morgage will be saved.

The banks refused to agree to the deal unless there retiring execs, who are allegedly responsible, get million dollar retirement bonuses.

They are not investing into american banks as this problem is "global" and the banks are all "connected". This money will go directly into overseas acccounts and when the fragile slumping economy, caused by a long war and general neglect, loses a large chumk of money it will be destitute.

Let us not forget market trends and fear mongering, a very profitable well run buisness can fold if investors get scared and pull their money.
It has happened in the past to very successfull banks where nothing but a quickly spread rumour of failure caused just that.
It is not a wise idea to announce problems as we seen by the immediate downturn of the economy and gigantic falls of the DOW and TSX. If people run around saying "it will get worse" and " this is the beggining" many investors will continue to pull out of north american buisnesses and it will free fall.

Moral and patience are instrumental in a strong economy and bush killed both.

This begs the question as to why one of the most well advised men in the world would CAUSE the economic downturn he spoke of on the door step.

When the 700B comes out, after the big hit it just took Post Bush announcement there wont be any money around to pay the bills and the bush supporters will say "we tried" and "it was imminent" or "we did what we could".

Banks make giant profits durring recession regaurdless of alleged "losses" and poor investments. As with any economic down turn you put your chips in wait it out and wait for the upswing to sell or liquidate your now very profitable investment.

When the citizens feel the hurt of another immediate 700B gone, magnified by the fact that it happened instantly, it will head south fast. People will relinqish their houses and assets the banks will keep the money in them and then the house themselves. They (the banks) on the backs of a nice 700B bonus will now have gained the realty of the majority of america and with a risk like swiftness snag up the rest of struggling buisnesses and investments at an extreme discount.

When one person owns everything in a given area its called a monopoly, when the banks own everything it will be called a one world government.

They are backing this idea with money from the federal reserve, its comprised of several global powerhouse banks privately traded and also silent owners of the apparently suffering lenders. There is no accountability proposed(punitive damages or fines) , no paper trail following, no directly implied amounts, not one morgage will be saved.

The banks refused to agree to the deal unless there retiring execs, who are allegedly responsible, get million dollar retirement bonuses.

They are not investing into american banks as this problem is "global" and the banks are all "connected". This money will go directly into overseas acccounts and when the fragile slumping economy, caused by a long war and general neglect, loses a large chumk of money it will be destitute.

Let us not forget market trends and fear mongering, a very profitable well run buisness can fold if investors get scared and pull their money.
It has happened in the past to very successfull banks where nothing but a quickly spread rumour of failure caused just that.
It is not a wise idea to announce problems as we seen by the immediate downturn of the economy and gigantic falls of the DOW and TSX. If people run around saying "it will get worse" and " this is the beggining" many investors will continue to pull out of north american buisnesses and it will free fall.

Moral and patience are instrumental in a strong economy and bush killed both.

This begs the question as to why one of the most well advised men in the world would CAUSE the economic downturn he spoke of on the door step.

When the 700B comes out, after the big hit it just took Post Bush announcement there wont be any money around to pay the bills and the bush supporters will say "we tried" and "it was imminent" or "we did what we could".

Banks make giant profits durring recession regaurdless of alleged "losses" and poor investments. As with any economic down turn you put your chips in wait it out and wait for the upswing to sell or liquidate your now very profitable investment.

When the citizens feel the hurt of another immediate 700B gone, magnified by the fact that it happened instantly, it will head south fast. People will relinqish their houses and assets the banks will keep the money in them and then the house themselves. They (the banks) on the backs of a nice 700B bonus will now have gained the realty of the majority of america and with a risk like swiftness snag up the rest of struggling buisnesses and investments at an extreme discount.

When one person owns everything in a given area its called a monopoly, when the banks own everything it will be called a one world government.

Your rant above is littered with inaccuracies and I hope NO ONE listens to you. Oh but you wont admit you're wrong, you'll just say that I live in a cozy bubble and you don't want to disturb me. Seriously, learn something about the financial system and it's institutions before you clog this site and it's threads with your garbage.

Your rant above is littered with inaccuracies and I hope NO ONE listens to you. Oh but you wont admit you're wrong, you'll just say that I live in a cozy bubble and you don't want to disturb me. Seriously, learn something about the financial system and it's institutions before you clog this site and it's threads with your garbage.

Well rugger teach me your knowledge so i can get it right. The government cares about us, they act on our best interest and corruption is non existent ? why the war then? who hit the towers? why have americans trampled the constitution because of fear? has any of the said threats happened? the economy was fine considering a long unjustified war, did bush not make it worse? tell me please. Be an adult dispute your point as i have, i dont see how negging my rep does anything its not like im telling a guy to stack methyls.

Bush has ****ed up this country financially. We had a balanced budget when he took office, and then his dumbass decides to run into Iraq and cause a large deficit.

I'm not saying he had anything to do with the current economic crisis. What I'm saying is that how the **** do you cut taxes and then increase spending? A damn baby can tell you that's not going to work.

Why is it that we, the people, can't do that, but government can? Oh, because government doesn't have to answer to anyone.